Japan poised to become world’s second-largest solar market with introduction of new FiT

Facebook
Twitter
LinkedIn
Reddit
Email

With European subsidies being cut left, right and centre, it appears Japan could fill the void and become the world’s second-largest market for solar power generation. The country will be welcoming the international solar community with open arms with the introduction of its latest feed-in tariff, which has the potential to generate US$30 billion by 2016 for the local economy. Industry Minister Yukio Edano approved the new rates this week, effective July 1.

The scheme requires Japanese utilities to buy electricity from renewable sources at a rate of ¥42 for systems of 10kW or more for up to 20 years. This is double the tariff offered in Germany and more than three times that paid in China, reports Reuters.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

“The tariff is very attractive,” said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. “The rate reflects the government’s intention to set up many solar power stations very quickly.”

However, on the other side of the fence, Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, Japan’s most powerful business lobby states, “This is a mechanism with a high degree of market intervention by setting tariffs artificially high and making users shoulder the cost. We question the effectiveness of such a scheme.”

Independent research brokerage CLSA Asia-Pacific anticipates solar capacity in Japan will total approximately 19GW by 2016, alongside the government’s more optimistic 22GW by the end of March next year.

Beneficiaries

Since the legislative discussions for the promotion of renewable energy began last year, following the forced exit of Japanese ex-premier Naoto Kan and the Fukishima disaster, Japanese PV Energy Association announced last month that total shipments grew 5.8% for fiscal 2011.

“We believe the biggest change in market dynamics in the coming year will be a flood of cheap foreign panel manufacturers into Japan,” said CLSA analyst Penn Bowers.

Chinese companies in particular are targeting the Japanese market, especially with the latest verdict from the US Department of Commerce. In particular, companies like Suntech stand to benefit greatly, according to Smallcap Network. “The stock has lost nearly 18% in the last month and the news of Japan promoting solar energy may just be the right catalyst for this oversold stock to jump.”

Trina Solar has been poised to enter the Japanese market since February 2010 without a great deal of success. However, with the inauguration of a headquarters in Singapore to oversee the Asian market and these FiTs, this offers a more positive outlook for the company. 

Reuters also lists Canadian Solar as a foreign solar panel manufacturer set to profit from Japan’s move away from nuclear power as well as Panasonic, Sharp and solar project installer Sekisui Chemicals.

“We no longer have enough electricity, especially during the day, and that is when solar power can help,” said Mikio Katayama, chairman of the electronics manufacturer Sharp Corp. and the Japan Photovoltaic Energy Association.

“This is a very good rate to promote investment and mega solars.”

TÜV Rheinland also set up operations in Tokyo last week. Dr. Manfred Bayerlein, CEO of TÜV Rheinland said, “With the new laboratory facilities in Japan, TÜV Rheinland underpins its global strategy of investing in the establishment of comprehensive infrastructure for testing renewable technologies such as solar, wind and fuel cells, as well as providing services related to electro-mobility. These activities are especially relevant in Japan, considering the recent changes in energy policies declared by the Japanese government.”

Electricity generation in Japan is predominantly from fossil fuels, which has risen to almost 90% due to 50 of the countries nuclear reactors being shut down. The rest of Japan’s electricity comes mostly from hydro power.

Residents who want to install panels on their homes will also be privy to subsidies. “The high purchasing price under the feed-in-tariff system is great news for us,” said Kazuhiko Katano, an official in Odawara's Energy Promotion Division. “The higher the price, the faster the penetration of panels will be.”

According to Bloomberg, Japan ranked sixth worldwide with 1.3GW of new installations last year, bringing its installed capacity to 5GW. Next year builders will erect roughly triple that level, or another 3.2GW to 4.7GW, New Energy Finance forecasts. One gigawatt is enough to supply about 243,000 homes in Japan.
 

Read Next

September 18, 2025
The capacity of virtual power plants in operation in North America has reached 37.5GW, a 13.7% year-on-year growth, according to Wood Mackenzie.
September 18, 2025
The Canadian Renewable Energy Association (CanREA) has forecast that Canada will add between 17GW and 26GW of solar PV over the next decade.
September 18, 2025
Researchers have called for enhanced international standards to detect ultraviolet-induced degradation (UVID) in PV modules after identifying “severe” levels of the problem in operational n-type panels.             
September 18, 2025
Indian PV makers have welcomed the government’s plan to add solar wafers to its ALMM List-III from June 2028.
September 17, 2025
US renewables developer Longroad Energy has reached financial close for its 400MW 1000 Mile solar project in the US state of Texas.
September 17, 2025
Spanish renewables developer and operator Acciona Energía has commissioned its 412MWp Juna solar PV plant in Kawani village in the western state of Rajasthan. 

Subscribe to Newsletter

Upcoming Events

Solar Media Events
September 30, 2025
Seattle, USA
Solar Media Events
October 1, 2025
London, UK
Solar Media Events
October 2, 2025
London,UK
Solar Media Events
October 7, 2025
Manila, Philippines
Solar Media Events
October 7, 2025
San Francisco Bay Area, USA